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16 May, 00:37

Your corporation has the following cash flows: Operating income $250,000 Interest received $ 10,000 Interest paid $ 45,000 Dividends received $ 20,000 Dividends paid $ 50,000 If the applicable income tax rate is 40% (federal and state combined), and if 70% of dividends received are exempt from taxes, what is the corporation's tax liability

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  1. 16 May, 03:27
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    Answer: $88,400

    Explanation:

    My corporation Plc

    Corporate tax for the year

    Operating incom $250,000

    Interest received $10,000

    Interest paid ($45,000)

    Dividends received $6,000

    Taxable income $221,000

    Since the tax rate is 40%

    Tax = 0.4x ($221,000) = $88,400.

    NOTES

    Taxable income is (250000+10000+6000-45000)

    Interest paid is in bracket because it's a deduction.

    70% of dividends received is excepted from tax

    0.3x20000=$6000

    Dividends paid out is after tax has been deducted.
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Home » Business » Your corporation has the following cash flows: Operating income $250,000 Interest received $ 10,000 Interest paid $ 45,000 Dividends received $ 20,000 Dividends paid $ 50,000 If the applicable income tax rate is 40% (federal and state combined), and
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